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Its Smart Use of Consumer Data Is as Important to the Company's Growth as Its Massive Ad Budget

Everyone knows Geico spends a ton on advertising. Just flip on a TV for a few minutes and you are likely to see one of the insurer's colorful characters -- the omnipresent gecko, a talking pig or a camel strutting around on Hump Day.

Yet despite spending $921 million on measured media last year, according to the Ad Age DataCenter, Geico is actually a pretty thrifty company. "We are a no-frills operation," said Chief Marketing Officer Ted Ward. "We are better off investing in technology than getting new marble floors and doors."

Geico's efficiency, which includes smartly using consumer data, is as important to the company's growth as its massive ad budget. And Geico surged in 2013, posting market-share gains that put it on pace to surpass Allstate as the nation's second-largest auto insurance company (behind only State Farm) by the end of the year, according to projections from business-data company SNL Financial.

Geico already passed Allstate in the first quarter of 2013, writing $4.7 billion in private auto-insurance premiums, up 11% from a year earlier, giving it nearly 10% of the market, compared with nearly 9% for Allstate, according to SNL data provided by the Insurance Information Institute. (State Farm's share was 18%.)

The company's expense ratio -- a key insurance metric that measures underwriting expenses like marketing and overhead as a percent of net premiums written -- is about 15%, compared with 26% for State Farm and 29% for Allstate, according to SNL figures provided by the Insurance Information Institute. The frugality is important because by keeping costs down, Geico can offer low prices, which is the centerpiece of its advertising.

The tagline, "15 minutes could save you 15% or more on car insurance," has been in use for nearly 20 years. Geico and longtime agency partners Martin Agency and Horizon Media have found funny and buzzworthy ways to keep telling the savings story. One of this year's big hits was the camel ad, which ends with one of Geico's classic punch lines: that people who save money on car insurance are "happier than a camel on Wednesday." The "Hump Day" spot ranked as the fifth-most shared ad on social media in the second quarter, according to Unruly Analytics. The video scored consistently well every Wednesday, unlike most brand videos "which usually peak on day two and experience a rapid social decay," Unruly noted.

As Mr. Ward tells it, the company's fascination with big data dates to the early 1980s when it sent out millions of pieces of direct mail to potential customers and diligently tracked response rates. "That basic concept really hasn't changed," said Mr. Ward, who has been with the company since then. But as Geico transitioned "from direct mail to phone to internet and now to mobile and portable devices, there's just that much more data that is available." Of course, other insurers have begun using similar models. Mr. Ward pointed to stalwarts like Allstate buying direct marketers such as Esurance. "It's one of the reasons that we are constantly trying to figure out how to do it just a little bit less expensively, a little bit more intelligently, because it's so damn competitive."